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O'Bannon v. NCAA, day two: Roger Noll fields questions about competitive balance

NCAA logoStanford Economist Roger Noll was asked if the NCAA is an anti-competitive monopoly. (G. Fiume/Getty Images)

OAKLAND, Calif. -- Day two of the O’Bannon v. NCAA trial began on Tuesday morning with Stanford professor of economics Dr. Roger Noll -- who testified for two and a half hours on Monday -- retaking the stand.

Michael Hausfeld, the lead attorney for the plaintiffs, continued to prod Noll to explain why he believes the NCAA is an anti-competitive monopoly. Noll explained that NCAA members “collude to … limit compensation allowed to athletes below market price.” Hausfeld also attempted to introduce documents related to the ongoing Power Five autonomy movement -- including a proposal authored by Florida president Bernie Machen and Nebraska chancellor Harvey Perlman, and the recent letter from Pac-12 university presidents to their colleagues in the other power conferences -- and to ask Noll about his opinions of them. The Power Five are “proposing to take the NCAA cartel and break it into two parts,” Noll said. The NCAA objected to this line of questioning, citing a rule that ongoing reform measures can’t be admitted as evidence of previous violations. Judge Claudia Wilken agreed.

Hausfeld then delved into the issue of competitive balance, one of the NCAA’s core legal defenses. Noll discussed studies showing how relatively few Division I schools win national championships or field Top 25 teams. “If it was completely balanced … the probability of not being ranked in Top 25 over time would be virtually zero,” Noll said. Later, NCAA attorney Rohit Singla strenuously objected to testimony about scholarship limits, claiming they’re not part of the case and leading to a lengthy back-and-forth involving all three parties.

Hausfeld asked Noll for an overview of his proposed alternatives to the NCAA’s no-pay policy. Noll referenced a possible group licensing of players’ names, images and likenesses and a set-up that deferred payments into a post-college trust fund and is not based on individual performances. Noll subsequently cited a study that BCS coaches’ salaries rose 512 percent from 1985 to 2010, compared with 108 percent for university presidents, as an example of the NCAA’s inefficient market. He suggested colleges could have redirected some of that money to players. “These [coaching] expenditures would go down if the exploitation would be reduced,” Noll said. “It’s not that people can’t afford it. That’s why it’s an anti-competitive harm.”

After five and a half hours over two days, Hausfeld ended his questioning of Noll, giving way for the NCAA to cross-examine.

Singla conducted the cross, which got off to a feisty start. “You realize that the NCAA only makes rules with the agreement of the colleges?” Singla asked. “That’s called a cartel," Noll replied.

On the subject of video games, the NCAA provided a window into its defense strategy when Singla asked whether there would still be a market for players’ names, images and likenesses if the schools refused to license their own trademarks. “You can’t have a college video game without the colleges,” Noll said. Singla then called out Noll for not conducting an analysis of the market for “other options” that EA Sports could substitute for the game.

Singla asserted that NCAA rules do not prevent a former athlete from profiting off his image from college. "If AT&T today wanted to use the image of Ed O’Bannon’s famous basket in an ad, there’s no rule stopping AT&T from paying him,” he said. However, Noll countered that stance, arguing that the rules remain unclear because UCLA would get in trouble if it promised O’Bannon such an opportunity.

In regard to live television broadcasts, Singla employed an argument the NCAA first introduced in last summer’s class certification hearing: Broadcasters pay for exclusive access to the stadium, not for the rights to televise athletes’ games. “If Stanford and Cal went and played at Golden Gate Park and any TV station could come, Stanford and Cal wouldn't get paid for it,” he said. This portion of the questioning became particularly contentious, with Noll calling Singla’s questions “vague” and offering several sarcastic responses.

“The reason schools are paid by broadcasters is because they control access to the stadium, correct?" Singla asked. “Not necessarily,” Noll said.

Singla hammered home that even professional sports leagues’ TV contracts do not include licenses for players’ images. However, Noll countered that those rights are collectively bargained. This point could ultimately be one of the most important issues of the entire case -- whether the name, image and likeness rights for which the plaintiffs want player compensation actually exist in TV broadcasts.

By the time court broke for the day, Noll had been on the stand for a combined seven and a half hours. He'll be back again on Wednesday.

For more analysis of O’Bannon v. NCAA, check out SI.com’s complete coverage hub.

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